Starting Is Easy, Finishing Is Hard

Starting a company has gotten much easier over the past decade.

The capital requirements to get started have come way down in both software and hardware businesses.

The supply of seed and venture capital has increased dramatically as well.

And there are all sorts of programs aimed at helping entrepreneurs get started.

All of this has caused a rapid expansion of entrepreneurship, startups, and innovation.

This is all great.

The one thing that has not gotten appreciably easier in the last decade is finishing.

Finishing can be anything that ends a startup project.

It can be an M&A exit, becoming a sustainable business, becoming a public company, or it could also be failing and shutting down.

None of those have gotten easier in the last decade.

There was a period where the “acquihire” was a thing and many companies that could not figure out how to become a business got bought for their talent.

But it feels like that wave has come and gone.

And so entrepreneurs and the investors who support them are back to grinding it out, trying to get to the finish line.

And, for many, that finish line feels like it is moving farther and farther away every step you take.

Startups are not for the faint of heart, both on the founder and investor side.

It takes great tenacity to see things through. And I think that may be truer today than ever.

#entrepreneurship#VC & Technology

Comments (Archived):

  1. JimHirshfield

    “Startups are not for the faint of heart, both on the founder and investor side.”Employees as well. Takes a team.

    1. fredwilson

      Yup. But the team can, and does, quit and go elsewhere. The other thing that has increased dramaticallyโ€‹ in the last decade is the mercenary-ness of the startup employee. I am not making a judgement about that. Just stating a fact

      1. awaldstein

        In a world where everything is built on the team, the era of the hired gun has come back.Counterintuitive.

        1. JimHirshfield

          I don’t think there’s any data to indicate that hired guns have increased or decreased. People are just people…and some of them are more focused on themselves than on the team.

          1. awaldstein

            hmmmmaybe its the word that is poor then.let’s presume you are a new market expert gm and strategic channels expert with enough savvy to negotiate an 80% draw till the market gets developed.and you have 6 or so jobs in the last 12 years.are you an expert for hire, a hired gun or just a person with bad luck?

          2. JimHirshfield

            Depends whether that person can demonstrate the results they’ve contributed to those companies. If they can’t, then they’re just a job-hopper. On the other hand, if all 6 jobs were startups and there’s demonstrable results to show for each, then she’s a rock star.If they jumped ship at the earliest signs of volatility, then they’re more likely to be looking to ride someone else’s wave.

          3. awaldstein

            makes me think of the great william carlos williams poem:so much dependsupona red wheelbarrowglazed with rainwaterbeside the whitechickens.

          4. JimHirshfield

            Simple and paints quite a pleasant picture in my mind. But not sure how it relates. ๐Ÿ™‚

          5. awaldstein

            everything simply depends….if this that. if that then maybe that.

          6. LE

            Like so many replies on AVC [1] operative is ‘me think’. That’s different than ‘it’s like’.This is why comments aren’t the same as verbal conversations.[1] I do the same thing.

          7. Vasudev Ram

            makes me think of haiku.

        2. Matt Zagaja

          The weird thing is companies now hire most of their employees at-will and then wonder what happened if an employee leaves. I always share the advice that my first year contracts law professor gave us: if you liked it then you should have put a ring on it. At-will employment is not the only employment option available in the world.

          1. awaldstein

            I’m not certain that I’ve ever seen any other though i have my own carve outs that I’ve used throughout my career.

          2. JimHirshfield

            Startups seem to be stuck on at-will employment. But that doesn’t mean there aren’t “rings on fingers”…for example, generous equity grants/vesting, vacation and other perks.

          3. Kirsten Lambertsen

            When I sold my company, the first complaint from the acquiring execs was that I was over-compensating my team (both monetarily and equity-wise). This from a couple of guys that I soon discovered couldn’t hang onto their own team (including *key* top execs) and who clearly didn’t understand the damage done by turnover.I had rock solid loyalty from my team by simply respecting their time, talent and contribution appropriately. Seemed pretty elementary, and the ROI worked.

          4. Anne Libby


          5. LE

            I had rock solid loyalty from my team by simply respecting their time, talent and contribution appropriately. Seemed pretty elementarySure but then you did what was in your best interest and sold the company. How do you think they felt about that? My guess is that the sale was a secret and I will further speculate that they had no idea that you would ever sell the company in the future and that added to the synergy.I did the exact same thing.Seemed pretty elementary, and the ROI worked.Sure but you have to consider that another company had to pay enough to buy you and still operate the business. With that debt load (not uncommon) I would think it would be more difficult to operate as you did. (Knowing only what you are writing here and not the host of other factors involved that is what comes to mind..)

          6. Kirsten Lambertsen

            Your guess and speculation are both wrong :-)My business was running like a top. They ran their business right into the ground (taking my investment in them with it). So…When you hire performers, they more than earn their compensation. When you nickel and dime people, you get people who think nickel and dime-ing is normal.

          7. cavepainting

            exactly. the industry is filled with the corpses of great companies that got screwed over post M&A by acquirers who thought all they had to do was cut costs,crack the whip, and get the cash to roll in. People, culture, and why they do what they do matter bigly.

          8. PhilipSugar

            Amen. See my comment above.

        3. JamesHRH

          There is a place in the lifecycle of a growing company for hired guns to come and go.Sometimes, the employee does not have mercenary intent. They are needed, then that time passes and maybe its time for them to move.

      2. JimHirshfield

        Correct. There are those that are quick to jump ship. But this blog post is about finishing – both wins and losses. Those that jump ship at the first sign of trouble shouldn’t have joined a startup in the first place. But I get your point: they have the “luxury” of being able to leave.On the “winning finishing” side, there are plenty of employees that carry their weight, and deal with the associated stress and burdens that puts on them, across the finish line. In this case, the hard work of finishing is a team effort.

      3. Matt Zagaja

        I think this is driven in part by the coding bootcamps. They have brought into the software engineering world a large cohort of people who are indifferent to what they do as long as they are well compensated for it. I don’t think this should be surprising, it is the natural flow of things for any well compensated field. The flexibility of the mercenaries is the dynamism of our economy. But I can imagine it is hell on the founders.We’re currently trying to hire a developer. Finding a missionary in the applicant pool is NOT easy. Let me know if you have any tips.

      4. leigh

        We made our Sr. people all partners. Eats into our ownership but the truth they would have left long ago when the going was tough. I think you have to think through what the most important people are to the business and make them part of it – it’s a worthy value exchange.

        1. Adam Sher

          Professional services firms do this. You have to survive a long time to become senior.

          1. leigh

            We are professional services (sadly for me ๐Ÿ™‚ but just did it from the beginning. It has it’s hiccups because we haven’t done an option pool in the broader sense, but overall, it’s been a really great structure for everyone.

        2. Vasudev Ram

          Reminds me of what Ricardo Semler did at Semco, as I said in a comment here to Fred’s recent post on Decentralized Self-organizing Systems:…Except, I think he (Semler) may have taken it further down the hierarchy (not only decentralizing the ownership but also the decision-making – which also has an indirect benefit and motivation of making those involved, have more skin in the game, than just as a worker bee).That route may not be for everyone though, only for those determined and aware enough [1] (meaning both the management and the workers, or associates, as Semler started calling them). As @Rob Larson said in a child comment there (“Yes, what he did was incredibly impressive …. “), it’s a difficult task.[1] “determined and aware enough”, because there are risks in that approach too, not just potential rewards. But as Admiral Grace Hopper said half a century or more ago:”A ship in port is safe, but that’s not what ships are built for.” – Grace Hopper…

      5. kidmercury

        increasingly companies will view employees the way they view AWS instances — hiring on demand, paying for usage. a natural development in a world of plentiful weak ties. #conwayslaw

        1. JimHirshfield

          Umm…I think you’re confusing people with machines, LOL.In all seriousness, we have that already – plenty of on-demand labor in the market. And there have been contractors and consultants for a long time.

          1. Adam Sher

            Maybe this recent iteration of just-in-time labor model will institutionalize flexible work schedules and lifestyles.My wife elected to work 80% at her law firm. This flexible work option is one of the most successful I’ve seen in big law, which means there are many partners who were promoted to such status while working less than 100%. Even with those successes, the program struggles, and does not have buy-in from all of the partners (it does have buy-in from the CEO).

          2. JimHirshfield

            Flex-time is a big plus.

          3. Adam Sher

            What if Google’s 20% you-time was “don’t come in 20% of the time”? That would make a ripple!

          4. kidmercury

            yes, though i expect the practice to accelerate, and view the increasingly mercenary-like nature of tech employment to be a step in that direction. commitment has an increasingly high cost in an increasingly unpredictable, unstable world; i think people will realize that and commit only when the cost is justified.

          5. LE

            From Dire Straits Solid Rock Lyrics:Well take a look at thatI made a castle in the sandSaying this is where it’s at you knowCouldn’t understand nowIf I realised that the chances were slimHow come I’m so surprised when the tide rolled in…

      6. Anne Libby

        This is a trend outside of startups, too. Employees don’t trust that companies have their best interests at heart — so why commit?As for startups, remember the secretaries at Lotus who became “millionaires” after the exit? Early employees aren’t always doing so well in exits.http://thegreatdiscontent.c…Yes, there are many sides to every story; my radar says that the situation described in link was probably #complicated.And, this isn’t the first time I’ve heard about a key early employee who didn’t do well financially in an exit.The stories that get told about this matter, they travel. It doesn’t have to happen many times for to make people skittish — or mercenary.

        1. awaldstein

          in everything in life only you–and you alone–have your best interest in mind.if the company needs cash or has to cut costs they do what they do. to think otherwise is not reality.the idea is to be informed and demand transparency then make a decision.

          1. Anne Libby

            Those of us who have around the block and know how to advocate for ourselves — hard-earned wisdom.And yet startups are peopled by many new to the workforce, like the young woman in my link.

          2. awaldstein

            don’t disagree at all just stating that self reliance with information is the principal learning experience we all go through.everyone learns the hard way.

          3. cavepainting

            “in everything in life only you–and you alone–have your best interest in mind.” Yes, that is the truth of life, especially at work. There are exceptions to this if you get great co-founders and business partners, but those are rarer than most people care to admit.

      7. PhilipSugar

        This is my case for starting up companies in areas other than the huge hubs.This is no way is an insult to the huge hubs. They have great talent, connections, culture and so much more. They have attracted employees that want to live the dream and will quickly leave once they think the company that they are working at is not going to provide it. Every startup begins as a dream, most then smash into hard reality, before they ever come out the other side.If you can pay people above average salaries as Kirsten says and treat them well in a place where not everybody does you can have very low turnover which saves you so much money.

        1. awaldstein

          yup and put your salesperson where the market is as necessary.

          1. PhilipSugar

            Yes and if it is enterprise sales that really just means close to an airport.

      8. Guy Lepage

        IMO. That means the founding team did not “invest” in their initial hires if they are leaving and going elsewhere. You reap what you sow. ๐Ÿ™‚

      9. Twain Twain

        Talent goes where they FEEL valued, where they believe their contribution really matters and where they have autonomy.Sure, some people may join to pay the bills.But the “rockstars” (who create Pareto’s cumulative advantages to a startup’s bottom line value) go where the conditions enable them to do exceptional work.Regina Dugan of FB, who just announced Building 8’s work on “typing by telepathy,” had written an FB post (when she was at Google) about how she was ready to quit tech to become a barista because she’d had enough of all the struggles of being a woman in tech. Yes, this from one of the most senior and talented technical women!!!Fast-forward a year or so and she’s pitching the future for 1.8 billion FB users.She persevered and is seeing it through as a female engineer in the hard areas of tech. That’s inspiring.

      10. Alex Dunsdon

        You lived through 2000..the tide will change, right?

    2. sigmaalgebra

      > Takes a team.Always? What about company romantic match making site Plenty of Fish founded by Markus Frind. Apparently some of the history is no longer available on the Internet, but IIRC Frind started with two old Dell servers and ads via just Google and got $10 million a year in revenue. He was a solo founder and 100% owner.IIRC at one time his early history and server farm architecture were at in……he grew the company to a dozen or two servers, maybe 32 processors, and 70 employees. In July, 2015, he sold out for $575 million.For more, as at…inSam Gerstenzang, The Happy Demise of the 10X Engineeris This is the new normal: fewer engineers and dollars to ship code to more users than ever before. The potential impact of the lone software engineer is soaring. How long before we have a billion-dollar acquisition offer for a one-engineer startup? How long before the role of an engineer, artisanally crafting custom solutions, vanishes altogether?One engineer has a lot going for them:(1) Hardware.Can buy the AMD FX-8350 processor, 8 cores, 4.0 GHz clock, 125 W, for about $140.Can get 16 GB of DDR3 1333 MHz ECC main memory from Kingston for about $155.Can get relatively fast hard disk drives of 2-3 TB for $50-100.Can get much faster solid state disk drives, now IIRC 14 TB each.Can get Ethernet network interface cards at 10 Gbps.So, hardware for data processing, storage, and communications are all much cheaper than just a few years ago and much, MUCH cheaper than in the history of computing.(2) Software.Nearly everything of general purpose usefulness that can be put into software has been and is available for free or nearly so. So, there are enormous numbers of collections of general purpose, infrastructure software — operating systems, data base subsystems, text editors, programming languages, integrated development environments, system monitoring and management tools, tools for data backup and restore, subroutine libraries, graphics, image manipulation, and video software, Web browsers, Web site foundations, etc.E.g., once I tried to do a Web startup that needed to do well handling still images: At each little thing, there were obstacles; none of these were insurmountable, but getting around or through each of them would take a lot of time, money, and effort. In the end, there were too many such obstacles. Now everything I needed is just routine, easy, cheap, nothing to it.(3) Internet Data Rates.Just as a home user can get data rates to/from the Internet at ballpark 100 Mbps. At colocation facilities, can get, say, dual connections to the Internet at 10 Gbps.E.g., currently 70 miles north of Wall Street, I have TV (which I have not watched since the first Republican debate in the last election), land line phone, and Internet access atdownload 55.20 Mbpsupload 26.48 Mbpsall for ~$90/month.(4) InformationOne of the bottlenecks in software development is technical information, e.g., documentation, but now the information readily available on the Internet is enormous with most of the best there is. The means of search, Google, Bing, etc., are amazingly good. The quality of the technical writing is usually poor and rarely very good, but there is a lot of information out there.E.g., for documentation for software tools for my startup, I found, downloaded, read, indexed, and abstracted about 6000 Web pages of information. That, and a cubic foot or so of books, has been enough — my software runs as intended.(5) PublicityWith blogs, Web news sites, Facebook, Twitter, YouTube, something interesting can go viral and get attention of millions of people in a few days.Why have a team?For a startup based on software and the Internet, the initial bottlenecks are(1) Problem to Be Solved(2) Core Solution Technology(3) System Architecture(4) User Interface, Experience(5) Technical Information(6) Technical Skills(7) Publicity SkillsPoint: The founder, CEO really should be good at all of (1)-(7). In this case, he might as well be a solo founder.Advantages of being a solo founder:(1) Founder DisputesIt is accepted that one of the main risks to a startup is founder disputes. A solo founder has none and, thus, has less risk.(2) Communications OverheadA team needs leadership, a team leader, and has lots of overhead for communications, consensus, etc. A solo founder has no such overhead.(3) Investment CapitalA solo founder has the lowest need for investment capital, has the lowest burn rate, etc.E.g., hiring involves recruiting, training, benefits, office space, computing resources, travel, equity participation, human resources overhead, management, etc., and a solo founder can get big savings on all of these.(4) Intellectual PropertyA startup really should have a Buffett moat, that is, a technological barrier to entry, from some crucial, core, powerful, valuable intellectual property, trade secrets, etc.Then the security of that information is important, and the easiest approach to that security is to have a solo founder, not to tell anyone else, and to keep the corresponding software well locked up inside a nicely secure server farm.Special OpportunityJust now there is a special opportunity:Computing still has Moore’s law, and it is still going and has not nearly been fully exploited.Just writing routine software is now essentially a commodity and by itself of low value and return on investment (ROI). Yes, it may be that some routine software can solve some pressing practical problem and, thus, be the main contribution to a successful startup, but in that case the software is not really a technological barrier to entry and other barriers, maybe a network effect, stand to be important.Necessarily software takes in data, manipulates it, and yields results. The goal is valuable results, and can get more value from (A) more/better input data and (B) better data manipulations. But (A)-(B) are not just routine software.For (B) the data manipulations, the computer science community and the information technology industry, e.g., Silicon Valley, have been trying artificial intelligence (AI) and machine learning (ML).But all such data manipulations are necessarily mathematically something, and for more powerful, valuable manipulations far and away the best approach is to proceed mathematically. Doing this at all effectively, however, requires some good training in pure/applied mathematics, at least a the level of a carefully directed Masters, plus some experience better to understand how applications are made. In addition for high ROI, it is better if the math be original; that is necessarily research; the education for that is a Ph.D. degree; long experience shows that doing well in a pure/applied math Ph.D. program is very challenging (the main challenge is the need for work that meets the usual research criteria “new, correct, and significant”).The challenge is severe enough that I’ve seen really bright, hard working, dedicated students, with spectacular undergraduate records, suffer the agonies of the damned, be seriously injured for life and/or killed. No joke.For whatever reasons, I found Ph.D. research in pure/applied math to be fast, fun, and easy. How’d I do that? Maybe I looked at reality fairly clearly. And I didn’t try to draw from the severe approaches to work and learning often seen in K-12 — nose to the grindstone, shoulder to the wheel, ear to the ground, obsessed about dotting i’s and crossing t’s, and just terrified of any sense of social disapproval. Instead, the standards are “new, correct, and significant”, and nearly no one in K-12 understands this or is even able to understand this. The research on paper can stand on its own, and lots of social this and that should be regarded as essentially just irrelevant down to really harmful.Pure/applied math research is not a Victorian, Midwest, uptight, church social tea party.Or, some of the challenge is buried in D. Knuth’s The TeXBook withThe traditional way is to put off all creative aspects until the last part of graduate school. For seventeen or more years, a student is taught examsmanship, then suddenly after passing enough exams in graduate school he’s told to do something original. Well, all that examsmanship, if taken seriously, and in too many top students is, is counterproductive down to just debilitating.It’s a fact — shocking but true — that nearly no one in computer science or information technology has the math prerequisites for such research. So, the original math of AI/ML, etc. is nearly all a lot of wasteful floundering around. Or the computer science and information technology communities do understand that they need more powerful, valuable means of manipulating data, but they just have too little in math prerequisites to proceed effectively.In effect, necessarily they are going for Ph.D. level original research starting with at most a college junior level background in math; even with a good undergraduate math major, a Master’s in pure/applied math, a good collection of research level grad courses, and good dissertation direction, pure/applied math Ph.D. research is very difficult; starting with only a junior level background such research is essentially impossible. E.g., one of the lies is that if want to make progress in AI/ML, then should take some computer science department courses in AL/ML — that’s nonsense. Instead, take some appropriate courses in pure/applied math and then apply that work to problems in AI/ML.So, now there is a big opportunity for Internet startup entrepreneurs with good backgrounds in software, pure/applied math, and research abilities. Silicon Valley has not figured this out yet (so far they have nearly no examples of big successes from such work).So, net, for this future, the field is wide open: “Look, Ma, no competition! Those other guys didn’t take the right courses in grad school, didn’t write pure/applied math Ph.D. dissertations, and haven’t gotten experience in applications! They even thought that because they wanted to exploit Moore’s law and computing they should study computer science — they were fools!”.Shockingly, nearly universally, the people in computer science who try to write math make a total mess out of it; they don’t even know how to write math; even if they have some good, intuitive, germs of some good math ideas, they will never be able to make significant progress simply because they can’t write down their work; like a person trying to cook but doesn’t know how to use a chef’s knife, they will never get good food on the table.This situation holds for famous, chaired professors of computer science at some of the very best computer science departments at some of the very best research universities (I’ll withhold names as out of professional courtesy).E.g., there is now, current, yet another striking example of this disaster, this time from, right, Stanford, athttps://ermongroup.github.i…Stanford Lecture Notes on Probabilistic Graphical Models……This example is just one of many. In this case, they make a total mess out of just the first pages of just probability theory, no doubt one of the main pillars of progress in AI/ML. Thus they have no chance of understanding anything important in probability theory — e.g., random variables, vector spaces of random variables, approximations and convergence of random variables, projections of random variables, Banach or Hilbert spaces of random variables, inner products of random variables, expectations of random variables, independence of collections of infinitely many random variables, conditioning on infinite collections of random variables, the weak and strong laws of large numbers, the more powerful versions of the central limit theorem, martingale theory, ergodic theory, stochastic processes, measurable selection, conditioning and the Radon-Nikodym theorem, conditional independence, sufficient statistics, the Markov assumption, stochastic optimal control, etc.The people who wrote this mess are not stupid or lazy. Instead they have been misled into thinking that for the future of computing they should study computer science instead of research level pure/applied mathematics. Their mistake is like someone wanting a career in medicine, getting a degree in nursing, and expecting, then to do not just surgery but research on surgery.It’s no surprise that they are not able to reinvent the crucial pure/applied math on their own: The body of fantastic results in pure/applied math on the shelves of the research libraries is enormous, and so far no one person has been able to reinvent all of that material. With their meager backgrounds in pure/applied math, they are not able even to read the relevant pure/applied math long since in clear, elegant, polished, rock solid presentations long since in books on the shelves of the research libraries. They are a very long way from being able to pass qualifying exams for a Ph.D. program in research in pure/applied math.So, for mathematician solo founders, there’s an opportunity.

      1. JamesHRH

        He’s an anomaly.PoF exited to one of the handful of huge, well funded sites, that was also one of its major ad buyers.They are very few online subscription models that scale which means there are even fewer opportunities to be the free version of the same thing.That being said, his execution was awesome and his thing was better.

        1. sigmaalgebra

          Another mall carry out pizza or Chinese food shop is not an “anomaly”.Essentially everything of interest in Silicon Valley, information technology startups is an anomaly. The goal when achieved is essentially an anomaly.Each decade there are at most only a few Googles, Facebooks, Amazons, Apples, Microsofts, Ciscos, Intels, Xeroxes, etc.The Internet and Web? A big step forward as TV, radio, steam and on the same list as the stored program digital computer, microelectronics, the transistor, the vacuum tube, the electric light bulb, airplanes, cars, steel, iron, open ocean sailing, bronze, copper, working in stone, fire, row crops, domesticated animals, genetics, the microbe theory of disease, DNA/RNA, silver halide photography, charged coupled device photography, open heart surgery, public health, mathematics, physics, chemistry, and more.Okay, each of these anomalies is rare. So, given the set of all startups in 2017, the probability of another Google or item on that list is tiny.Alas, sorry, but that probability doesn’t mean much! Instead, what is meaningful is the conditional probability of success given other information. Given appropriate other information, that conditional probability can be near certainty. E.g., the transistor was on the list and, thus, a massive anomaly, but given what Shockley, Bardeen, and Brattain knew when they started working on the project before it was interrupted by WWII, their chances of success were quite high. Sure, the SR-71 was one heck of an anomaly, but given what Kelly Johnson brought with him in his presentation to the CIA, the project was low risk. Sure, the Navy’s version of GPS was one heck of an anomaly, but given the plans of the physics guys at the JHU/APL (early in my career I worked in that group) there was no doubt at all. Sure, atomic fission chain reactions were a huge anomaly, but given the results of Hahn, Meitner, and Strassman in Germany, Wigner at Columbia, Fermi at Chicago, and then the work on plutonium by Seaborg, etc., Fat Man and Little Boy were not very high risk and, really, had fantastic ROI in US blood and treasure from not having to invade the main islands of Japan.If my project is as successful as I anticipate, then it will be a wild anomaly, a rare event. But given what I know about the project, the applied math with theorems and proofs I have, and the software I have running, the project is in the math no risk at all, similarly for the software I have running, in basic effectiveness as intended as a Web site low risk, and in the market not very high risk.For me, now the project is less risky and takes less cash to bring to nice earnings than a pizza or Chinese food carryout, an auto repair or body shop, a suburban grass mowing service, an independent plumber or electrician with a panel truck, etc.

  2. Tom Labus

    IPOs in a decade long serious decline. It’s difficult to know the whole story but I don’t see early selling as entire cause. Let’s hope the cycle changes soon.

    1. Eric Satz

      Bar is higher as it should be and reporting requirements pain in the ass because the bar was too low before.

      1. JimHirshfield

        Was it? What exactly is that bar for? Seriously, what’s the purpose? We still scared that grandma is going to bet it all on stock?

        1. Adam Sher

          The bar is even lower because of Title III of the JOBS act, which allows small, private companies to solicit the public. There are, of course, limitations to the individual and aggregate amount of money companies may raise using this venue. Title III follows the trend of additional rules that allow companies to solicit people to raise money with less than full SEC or FINRA oversight. Reg D exemption is one of the most common in the fund world.

          1. Eric Satz

            That is an individual investment bar not an IPO bar and there is very little unaccredited investor activity taking place…Except on places like Kickstarter where the investor’s upside is capped at the thing they’ve bargained for.

          2. awaldstein

            You see this changing anytime soon?

          3. Eric Satz

            90+% of savings lives in IRA/401k accounts. until individuals can easily and cost effectively access that money for investment purposes unaccredited investment volume will remain low.

          4. awaldstein

            Thanks my friend. Trust that all is good with you.

          5. Eric Satz

            Indeed! And i hope the same with you.

          6. awaldstein

            Coffee or better wine next time in town is on the table.

          7. Eric Satz

            you got it!

        2. Eric Satz

          The bar is for companies that have a realistic path to profitability. No more what you lose in margin you make up in volume. If that were the case instacart would be public by now.

      2. Adam Sher

        The bar is still low. You have to pay to play. If the bar was higher then companies such as HubSpot would not be able to have an IPO without first posting a profit.

      3. sigmaalgebra

        “Reporting requirements”?I’m a solo founder and 100% owner of a sole proprietorship to be an LLC, and I “don’t need no stink’n” reporting requirements.

        1. Eric Satz

          nor would anyone in their right mind want them if they didn’t need or want the liquidity

          1. sigmaalgebra

            Right.For my startup, if it is really successful, as I anticipate, then if I want to retire and convert everything to cash, say, for my heirs, then maybe I’ll do an IPO. But, really, for the heirs, likely better to put the private company in a trust fund of some kind and have the BoD of the fund hire/fire the CEO of the private company and pass out cash to the heirs, e.g., for college, a house, etc. as needed. Otherwise have it as a charitable trust fund of some kind. Sell? Sure. Sell the the public as an IPO? Likely should be better alternatives.

  3. awaldstein

    It is easier then ever to start.It is significantly more difficult and capital intensive to capture your market then ever before.I used to think that regardless of the increase in startups the percent of winners and losers was the same.I think not that the percentages are even getting tougher.

    1. sigmaalgebra

      > It is significantly more difficult and capital intensive to capture your market then ever before.Ah, it’s “the best of times”!Get something new, cheap and easy for a solo founder to bring to market, e.g., exploiting Moore’s law, difficult for others to duplicate or equal, e.g., exploiting some original, powerful applied math, that nearly everyone on the Internet will like a lot and then get a big boost from the now really strong cases of Internet virality.Treasure hunting is always really difficult if digging with weak tools in the wrong place.

  4. TuringMachineNYC

    Are acquihires indeed down from earlier years? What is driving the downward trend?

  5. William Mougayar

    Add to that, the fuel that cryptocurrency-based crowdfunded token sales are providing (ICOs).About $250M were raised last year using that method, and I expect that number to swell to $600M this year, on a global level.I joke that, if you can fog a mirror, you can raise money on an ICO today. But I have also said that a successful ICO is not related to the success of the ICO. Raising money is just the beginning.

  6. John Pepper

    Yet, for those many who still struggle to start, despite tools and connections that supposedly make it all easier, it’s still hard as hell to get people bought in, to form a talented and effective team, to raise capital, to get real traction, etc. For every team that shows up with a decent pitch (whether funded or rejected) there are many others that didn’t even get that far. They feel the risk as they dip a toe or two into the water, they sense the crowded marketplace, the inevitable competition, and they run back to where it’s safe. Yours truly has done this on a few occasions over the years. For many of us (most of us?), it’s still hard to start – definitely not easy. And yes, hard to finish. So better enjoy all of it in the meantime ๐Ÿ˜‰

    1. sigmaalgebra

      > the crowded marketplace, the inevitable competition,In some words from the first movie about Indiana Jones, “they are digging in the wrong place”.> For many of us (most of us?), it’s still hard to start – definitely not easy.The economy is not yet able to make very many billionaires. But things that help include luck and digging in the right place.Everything about my startup unique to my startup has been fast, fun, and easy for me. I’ve had some independent, random, exogenous interruptions that are delays but not at all fundamental. And I struggled terribly with the Microsoft documentation I needed, but I’m long since past that now.There has been and remains only one main question: Will the users like the results. My view is that my Web site should get on average about 30 minutes a week from 90% or so of everyone on the Internet in the US and, if I want, the rest of the world, and that should make a successful business.Why 30 minutes and 90%? I picked a problem important, where the first good solution is a must have as soon as it exists, for the 90+%, so far unsolved or solved at best poorly, worked up a really good solution, and programmed it. For people to get the solution, results, they want will require the average of the 30 minutes — the software is interactive. The software all runs as intended. For them, the 30 minutes will be, in their lives, a fantastically good return on their time investment. Also, for some users, my solution has an addictive, interactive game quality.Due to the interruptions, I have not been able to concentrate on the real work for months, but the software is still sitting there, just as I left it, nicely backed up, and ready to go again when I can get the interruptions OFF of my must TODO list. I’ve been getting nice victories over the interruptions right along, and from some work of the past week stand to make some good progress on one of the items from a just a phone call or two today.The software is 24,000 programming language statements in 100,000 lines of typing and appears ready for at least early production.A nice point is, there is zero sign that anyone else is able to solve the problem although some people flounder around on the edges of the problem. For some of why the Silicon Valley, computer science, information technology, AI/ML communities can’t get a good solution, see my long post here today above.For my work, I see no “crowded marketplace” or significant “competition”. Why? A good solution is easy for me but essentially impossible for essentially everyone else in information technology startups.E.g., for results such as I intend, one of the most important steps is initial problem selection. In one word, the key is something “new” — new problem, new solution, new crucial core to the solution. Without a crucial core of secret sauce for a “Buffett moat”, need, say, a nice network effect. My startup has a powerful network effect but not as powerful as some other startups.

  7. Vendita Auto

    IMO One should remember North Americans have real experience / hindsight (mindset) move use it in nascent markets the global village is only starting to evolve

  8. LIAD

    starting takes bravery. finishing takes commitment.many have neither. some have one. few have both.

    1. Matt A. Myers

      Starting takes naivety, finishing takes courage.

  9. pointsnfigures

    Every startup should put these initials on their wall: MTXE. It stands for Mental Toughness Extra Effort.

  10. Eric Satz

    “It takes greater tenacity to see things through.” Always, in all ways.

  11. Pranay Srinivasan

    Businesses, no matter who starts them will go thru a near-death phase.Whether the business dies or not depends on whether the team believes in the leader or not.The business will survive if customers keep buying from it.The business will survive if vendors keep selling to it.The business will never survive if it doesnt listen. to customers. to vendors. to its team.

  12. Frank W. Miller

    I would add that as the CS field matures, the ability to come up with an idea that results in a big new business at the end decreases.

    1. sigmaalgebra

      Yes, but, as in my post today above, the CS field is not nearly ready or even able to “mature”.To entertain that the CS field is moving forward significantly or within site of being at all “mature” is to listen to the floundering and clueless nonsense of the lost people in the CS field. That field gets students because the students want jobs, see that computing is important in the economy, and believe that a CS degree is the best approach to jobs in computing — only true in a not very good sense. That field gets research grants because it pushes a lot of hype and has a large enough inside group that doesn’t see how the field should really make progress so is content with the CS nonsense. The people who know how the field should really move forward don’t care about CS, information technology startups, or Silicon Valley. And that’s where it stands and will continue to stand for, judging from the rate of past progress, at least three more decades.For CS, there was D. Knuth and related work, and in recent decades there’s been some applications of old work in statistics and optimization. Otherwise anything very new or significant in CS has been more rare than hen’s teeth.

    2. Twain Twain

      CS as a field is just starting. There is this whole sphere of language understanding that CS has not even started to realize that “We don’t know what we don’t know.”https://uploads.disquscdn.c…I agree with Fred; startup ideas have never been easier to have up and running in a weekend.My team of strangers just won IBM Cognitive Builder Faire SF using IBM Bluemix and Nimbix toolkits. https://uploads.disquscdn.c…Nevertheless, to innovate and build towards much longer term objectives and successful products takes a great team, guts, perseverance, mentorship, capital and a whole bunch of other [email protected]:disqus @wmoug:disqus @JimHirshfield:disqus @ccrystle:disqus @liad:disqus @philipsugar:disqus @MsPseudolus:disqus @leigh:disqus @le_on_avc:disqus @jameshrh:disqus — So many tools everywhere, 2-4 full-stack engineers is all that’s needed to build an AI application that can potentially be used by billions of people.I coined the term “VOICE CRUMBS” (C) Twain, April 2017 this w/e. Google search it and it doesn’t even exist yet!

  13. Gregory Magarshak

    “It takes great tenacity to see things through. And I think that may be truer today than ever.”Tenacity for sure, but fueled by passion.I would say our experience may be typical in one respect and atypical in another. We focused on growing our business, steadily increasing our user base and revenues per user. We now passed 5 million downloads and still did not raise any institutional funding.It’s not that we didn’t want to. It’s just the process of raising the funding seems to be a long and pretty significant distraction from building the business. Every time we increased our revenues (either via business clients or $ per end-user consumer) we felt like we need venture capital less and less.We are still at a point where VC would make a big difference, but much less than several years ago. I often wonder if we made a mistake not focusing on raising venture capital sooner. We would have gotten a lot more done. But every year we are in a stronger position as a company, so there’s an argument both ways. At the end of the day, though, if I had to give advice to new entrepreneurs, I’d say take the VC, hire the right people sooner and save years of your life.

  14. Salar Salahshoor

    I agree that starting up is easier than ever, but according to recent research from the Kauffman Foundation, there has been a drop in entrepreneurial activity among young people despite the lower barriers to entry.”The share of new entrepreneurs in the 20- to 34-year-old age group fell to 25 percent in 2014, from nearly 35 percent in 1996.” If interested, you can read more here:…It seems the weight of student loan debt is greater than the promise and ease of entrepreneurship, which is unfortunate if it’s true.

  15. jason wright

    study the dynamics of the professional cycling peloton at race speed.

  16. alexdschiff

    We sold in 2015 and went through the M&A ringer. The acquihire phenomenon still exists but it’s definitely not the same as it was back in ~2012 – at least in my experience companies are no longer just buying companies to fill engineering seats. So you have to either be super specialized or senior to make that scenario work.

  17. Tim Mullen

    This post really hit home on so many levels. Starting is indeed very easy but the execution… this is what sets the great apart from the good. So when that finishing line does seem so far away I find it’s so important to love the journey; that’s what keeps you going. Thanks Fred, love all your posts but this one was especially awesome.

  18. Roger Toennis

    Well we got to he first finish line after 18 months start to merger with a real company. Now though we have a new start and a new finish to go get. One step at a time. http://www.channelpartnerso

  19. Dylan Dewdney

    So very true; having recently lived through founding my first startup with sizeable seed, I can attest that starting is the easiest part by such a margin that if it weren’t connected to some end it should be discounted almost entirely.

  20. awaldstein

    ain’t that the truth.

  21. JimHirshfield

    Hahahahhaha. Love that like!